Financial Abuse — Older or Incapable Relations Money Being Wrongly Used

Financial abuse impacts those in social isolation, economic need, and the ageing population. 

If you’re concerned that an at-risk adult or elderly relative’s money or assets are being misused, whether through manipulation, coercion, or outright theft, the situation can deteriorate quickly and assets can be lost.

This article examines the most common signs of misuse of funds in the elderly or people lacking mental capacity, and what you can do about it. 

Acting swiftly matters. Early legal advice can help protect your relative’s financial position and, in many cases, recover what’s been lost. We act for family members, executors, and concerned individuals in these situations. Contact us for a no-cost, no-obligation initial conversation. Our commercial litigation team works nationally, has decades of experience working in cases like these, and would love to help you.

Recognising When Funds May Be Being Misused

Financial abuse has many forms, from overt misuse of funds and theft to subtle manipulation and coercion that’s potentially open to interpretation. 

However, there are some consistent red flags to look out for if you have an elderly or adult at risk family member or friend.

• Misuse of Funds → High-risk investments, loan and credit card applications, or ‘borrowing’ money from an elderly person, should raise concerns. These are all potential misuse of funds; transactions that are not in that person’s best interests.
• Sharing Bank Accounts → If someone is pooling their resources with an elderly person like sharing a bank account, this should also raise suspicions. Funds should be kept separate and supported by clear records.
• Denied Access → Lack of access to money or unpaid bills are another red flag, especially large sums like care home fees.

• Ring-fencing → It’s not unusual for someone who’s misusing the money of an elderly or at-risk adult to ring-fence them off from other family members and friends to hide their actions. This doesn’t necessarily have to be a new friend or a carer.
  
• Isolating Family Members → There are plenty of examples of a family member isolating an elderly relative from the rest of their family, so they can manipulate money and assets to their own advantage.
• Covertly Rewriting a New Will → Sometimes, controlling behaviour extends to the execution of a new will that disinherits other family members, which in effect, is financial abuse that continues after the person’s death.

The Legal Framework: Authority, Capacity, and Misuse

Some elderly or incapable people may have issues with cognitive function and cannot make their own decisions, financial or otherwise. If you suspect financial abuse, report it to the relevant authorities as soon as possible. This might include your relative’s GP, the Safeguarding Team at Adult Social Services, or the police. 

Some people execute a Lasting Power of Attorney (LPA) giving authority to a third party to control their affairs if they lose mental capacity. 

Whether there’s an LPA or not, you should take specialist legal advice if you suspect an incapable or elderly relative’s money or assets are being misused.

When Misused Funds Enter Business or Investment Structures

Sometimes, misused funds may end up in investments or business arrangements, and depending on the specific facts, these transactions can often be unwound. However, much depends on the nature of the financial transaction and whether it’s possible to challenge the decision-maker.

We advise family members, executors, and concerned individuals dealing with suspected misuse of an at-risk person’s funds, particularly when money has been fraudulently diverted into business or investment activities. Contact our specialist commercial solicitors if you suspect misuse of funds for an at-risk person in your life. 

Litigation: Recovering Funds and Unwinding Transactions

It’s always worth starting with a low-key approach; if you can alter or reverse misuse of funds without resorting to official channels, then it may be possible to tread the difficult line between disagreements and maintaining close family relationships.

However, this is often impossible, not least because the perpetrator may refuse to cooperate, but also the continuing worry that any financial abuse may be ongoing rather than an isolated incident.

When Litigation Is Necessary 

If formal action is necessary to resolve misuse of funds, litigation may be unavoidable to reverse inappropriate financial decisions. Litigation is not without risk, and outcomes depend on the specific facts of each case, but we’ll give you an honest assessment of prospects before you commit to any course of action.

Some cases may support a claim for civil fraud depending upon the facts. Recovery may be pursued through the civil courts, and the perpetrator could face criminal charges.

Court of Protection: Securing Control and Preventing Further Misuse

Trying to unravel investment decisions and financial transactions that are not in a person’s best interests is one element of the problem. However, there’s likely an imperative to also prevent further misuse of funds and assets.

The Court of Protection is a specialist court in England and Wales with the power to make decisions for people who lack mental capacity.

Established under the Mental Capacity Act 2005, this court has jurisdiction over an incapable person’s property, financial affairs, as well as their personal wellbeing.

The Court of Protection can only make decisions for someone who lacks mental capacity. A person in cognitive decline may have inconsistent mental capacity and may be able to decide on some things and not others.

Where mental capacity is disputed, a common defence to allegations of financial misuse is that the person understood what they were doing and consented to it. The Court of Protection can make a binding ruling on that question, and most applications to it arise precisely from this kind of disagreement about what’s in someone’s best interests.

Choosing the Right Approach: Recovery vs. Protection

The right approach is usually dictated by the individual situation. Recovery may be desirable in principle, but if the sums involved are not large or the financial transactions not hugely concerning, then seeking protection for that individual going forward may be the better option.

On occasion, recovery and protection may be the correct steps to take.

Early advice significantly increases your options. The sooner you act, the more we can do to preserve assets, contain further loss, and keep recovery realistic whether through negotiation, civil proceedings, or an application to the Court of Protection.

Frequently Asked Questions

What Should I Do if I Think Someone Is Misusing a Relative’s Money?

Seek immediate advice from Adult Social Services, your relative’s GP, or the police. These organisations can signpost you to the right help, which may involve a specialist solicitor, particularly if you’re looking to recover funds and/or apply to the Court of Protection.

Can Funds Be Recovered if They Have Been Used in a Business?

Potentially. A lot depends on the nature of the transaction, how it was made, and the status of the person responsible for the misuse of funds in relation to that business. It may be possible to recover funds without going to court in straightforward cases where a business arrangement is easily unwound. Complex or disputed transactions may require litigation.

When Should the Court of Protection Be Involved?

The Court of Protection becomes involved when a person lacks mental capacity to manage their financial affairs, and there’s disagreement about individual transactions and financial arrangements. The Court can rule on mental capacity and ensures that any decisions are made in the best interests of that individual.

Speak to Helix Law About Protecting an Adult at Risk’s Assets

Many family disagreements over financial management for elderly or incapable relatives end up as a formal dispute, with legal action to recover money and applications to the Court of Protection.

Taking legal action early can protect not only your position with expert guidance but also that of your relative, ensuring their financial status going forward with decisions made in their best interests.

We provide prompt and strategic advice, acting swiftly to protect incapable or elderly relations. We understand the complexity and nuances of these situations and use strategic legal action for recovery if there’s no other option. If you’re worried about an incapable or elderly person, speak to our specialist commercial litigation team today. We would be happy to assist you.